Thursday 14 December 2017

I'm in arrears on my mortgage, do I get an SFS form?

siryan@independent.ie

I've been in arrears on my mortgage for three months now and my bank has asked me to complete an SFS form before it will discuss restructuring. What is this and what will it do?

I'm sorry to hear about your problems, but you are far from alone. According to recent data from the Central Bank, over 77,600 mortgage holders are in arrears for over 90 days -- 10pc of the market. Because of the moratorium which prevents banks from initiating repossession proceedings for two years, they are having to manage individual situations as best they can to recover their debt.

The Standard Financial Statement (SFS) is a mandatory part of the Code of Conduct on Mortgage Arrears. It is effectively a set of accounts for your household, showing income and outgoings so that the bank can get a fuller picture of what you can afford to pay on your mortgage. Because it is quite complex (it runs to 10 pages), the bank must help you in completing it and much of the information will be in there anyway, as your current account will show direct debits and standing orders, along with your salary details.

If you would prefer, MABS also offers an assistance service for completion, or indeed, you can do it yourself if you feel up to it -- it can be downloaded from the Central Bank website (www.centralbank.ie) -- just put "SFS" in the search box.

The most important thing is not to ignore it. If you engage with your bank they are much more likely to restructure your mortgage for you.

My friend and I bought an apartment to live in five years ago, with another 20 years remaining on the mortgage. Both our circumstances have changed and we are considering moving out and renting the apartment. I believe we would lose a lot of TRS by doing this? What other implications are there to consider before making this decision?

Should you move and let out your apartment you will no longer be entitled to mortgage interest tax relief (TRS) as a first time buyer and the obligation is on you to notify Revenue of this.

Susan Cosgrove of Cosgrove Gaynard Solicitors quantifies this for you: "At present you are entitled (based on first time buyer) to TRS at 30pc (max €10,000). This ceiling will reduce automatically in 2014 to €3,000 until 2017 when it ceases altogether.

"Your bank may charge you a different mortgage interest rate as an 'investor' rather than owner occupier. Check your mortgage agreement. Investors are generally charged more for loans," she says.

However while rental income received from property is taxable, you are allowed some deductions against this income including 75pc of the mortgage interest. Any surplus will be taxed annually on a self-declaration basis.

All tenancies have to be registered with the PRTB at a cost of €90 and then there is the second home tax of €200 as well as the household charge and possible property tax.

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